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Europe Roundup: Euro gains on better-than-expected EZ industrial production data, greenback slides as upbeat U.S. inflation figures fail to roll back rate cut expectations, European shares surge - Friday, July 12th, 2019

Market Roundup

  • BoE could need to cut rates if Brexit uncertainty persists - Vlieghe
     
  • China's June exports fall after U.S. tariff hike, imports shrink more than expected
     
  • China iron ore imports in June fall to lowest since Feb 2016
     
  • China's June coal imports fall as local miners boost output
     
  • China June rare earth exports rise, snapping two months of declines
     

Economic Data Ahead

  • (0830 ET/1230 GMT) The U.S. producer price index is likely to remain unchanged in June, while in the 12 months through the same period, it is expected to have advanced 1.6 percent. PPI excluding food and energy probably edged up 2.2 percent after posting a gain of 2.3percent in May.
     
  • (1300 ET/1800 GMT) Baker Hughes reports U.S. Oil Rig Count. 

Key Events Ahead

  • (1000 ET/1400 GMT) Federal Reserve Bank of Chicago President Charles Evans gives a speech

FX Beat

DXY: The dollar index slumped as investors cautiously await Chicago Federal Reserve President Charles Evan's speech due later for further cues on the U.S. monetary policy outlook. The greenback against a basket of currencies traded 0.05 percent down at 97.03, having touched a high of 97.59 on Tuesday, its highest since June 19.

EUR/USD: The euro gained, hovering towards a 1-week peak hit in the previous session, after data showed Eurozone's industrial activity witnessed a minor improvement in May, after the recent downturn. The economy's industrial production bounced 0.9 percent in May after declining by 0.4 percent in April, surpassing expectations of a 0.2 percent rebound. The European currency traded 0.05 percent up at 1.1259, having touched a high of 1.1286 on Thursday, its highest since July 5.  Immediate resistance is located at 1.1304 (50.0% retracement of 1.1412 and 1.1193), a break above targets 1.1366 (78.6% retracement). On the downside, support is seen at 1.1207 (July 5 Low), a break below could drag it below 1.1181 (June 18 Low).

USD/JPY: The dollar eased, drifting closer to a 6-day low hit in the previous session, as stronger-than-expected U.S. inflation data failed to ease expectations the Federal Reserve will start cutting interest rates at a policy meeting later this month. The pair was trading 0.1 percent down at 108.40, having hit a high of 108.99 on Wednesday, its highest since May 31. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. producer price index and Fed Evan's speech. Immediate resistance is located at 109.08, a break above targets 109.62 (May 31 High). On the downside, support is seen at 107.76 (July 2 Low), a break below could take it lower at 107.10 (June 26 Low).

GBP/USD: Sterling rose, extending gains for the third straight session, as the greenback tumbled across the board. However, weak data and the growing possibility of interest rate cuts after a chaotic Brexit limited the upside in the major. The major traded rose 0.1 percent to 1.2533, having hit a low of 1.2439 on Tuesday, it’s lowest since Jan. 3. Investors’ attention will remain on the development surrounding Brexit, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2571 (38.2% retracement of 1.2783 and 1.2439), a break above could take it near 1.2652 (61.8% retracement). On the downside, support is seen at 1.2481 (July 5 Low), a break below targets 1.2443 (July 10 Low). Against the euro, the pound was trading flat at 89.82 pence, having hit a low of 90.10 on Wednesday, it’s lowest since Jan. 11.

USD/CHF: The Swiss franc gained as the greenback continued to decline on growing expectations of more aggressive 50 basis point cut at the Fed's July 30-31 meeting. The major trades 0.3 percent down at 0.9872, having touched a high of 0.9951 on Tuesday; it’s highest since June 19. On the higher side, near-term resistance is around 0.9959 (June 12 High) and any break above will take the pair to next level till 0.9999 (June 17 High). The near-term support is around 0.9834 (July 3 Low), and any close below that level will drag it till 0.9791 (June 20 Low).

Equities Recap

European shares surged after data showed China’s exports rose 6.1 percent in the first half of this year from a year earlier, while imports increased 1.4 percent.

The pan-European STOXX 600 index gained 0.2 percent at 387.39 points, while the FTSEurofirst 300 surged 0.1 percent to 1,525.23 points.

Britain's FTSE 100 trades 0.3 percent up at 7,531.15 points, while mid-cap FTSE 250 rose 0.4 to 19,527.19 points.

Germany's DAX declined 0.05 percent at 12,329.35 points; France's CAC 40 trades 0.5 percent higher at 5,581.19 points.

Commodities Recap

Crude oil prices rallied, hovering near a six-week high recorded in the previous session, as U.S. oil producers in the Gulf of Mexico cut more than half their output due to a tropical storm and as tensions continued to simmer in the Middle East. International benchmark Brent crude was trading 0.4 percent higher at $66.99 per barrel by 0952 GMT, having hit a high of $67.63 on Thursday, its highest since May 30. U.S. West Texas Intermediate was trading 0.05 percent up at $60.40 a barrel, after rising as high as $60.91 o Thursday, its highest since the May 23.

Gold prices surged and were on track to post a weekly gain, as renewed U.S.-China trade tensions and prospects of an interest rate cut by the U.S. Federal Reserve stoked safe-haven demand. Spot gold was trading 0.2 percent up at $1,405.75 per ounce by 0955 GMT, having touched a high of $1,427.06 on Thursday, its highest since July 3 and has was nearly 0.9 percent up so far this week. U.S. gold futures gained 0.3 percent to $1,411.30 an ounce.

Treasuries Recap

The U.S. Treasuries slipped during the afternoon session, after falling by a greater margin in the overnight session, owing to the jump in June CPI, ahead of the country’s producer price inflation (CPI) data for the similar period, scheduled to be released today by 12:30GMT. The yield on the benchmark 10-year Treasury yield gained nearly 1-1/2 basis points to 2.132 percent, the super-long 30-year bond yields jumped nearly 2 basis points to 2.657 percent and the yield on the short-term 2-year traded almost flat at 1.857 percent.

The German bunds slumped during the European session, following the wave of global debt market fall after the United States’ Treasuries, tracking the better-than-expected rise in the June consumer price inflation (CPI), that led to hopes of a recovery in the world’s largest economy. The German 10-year bond yields, which move inversely to its price, jumped 1-1/2 basis points to -0.249 percent, the yield on 30-year note surged 2 basis points to 0.395 percent and the yield on short-term 2-year traded flat at -0.724 percent

The Japanese government bonds suffered at close on the last trading day of the week tracking a retreat in the U.S. counterpart following a stronger-than-expected rise in the latter’s consumer price inflation (CPI) for the month of June, despite extreme dovish comments from Fed Chairman Jerome Powell, delivered earlier this week. At close, the yield on the benchmark 10-year JGB note, which moves inversely to its price, jumped 2 basis points to -0.125 percent, the yield on the long-term 30-year surged 2-1/2 basis points to 0.380 percent and the yield on short-term 2-year improved to -0.180 percent.

The Australian 10-year government bond yield hit 1-month high during Asian session of the last trading day of the week, tracking a similar movement in the U.S. Treasuries after the United States’ consumer price inflation (CPI) for the month of June came in stronger than market expectations. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, surged 10-1/2 basis points to 1.445 percent, the yield on the long-term 30-year bond jumped 11-1/2 basis points to 2.092 percent and the yield on short-term 2-year traded nearly 4-1/2 basis points to 0.997 percent.

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July 2 15:00 UTC Released

DKCurrency Reserves

Actual

449.6 Stale

Forecast

Previous

451.7 Stale

July 2 13:45 UTC Released

USISM NY Biz Conditions

Actual

50 %

Forecast

Previous

48.6 %

January 31 00:00 UTC 820283820283m

ARAnnual Primary Balance*

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2016 bln ARS

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Bln AR bln ARS

January 31 00:00 UTC 820283820283m

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2016 bln ARS

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Bln AR bln ARS

January 22 19:00 UTC 832103832103m

ARTrade Balance

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-1541 %

January 31 00:00 UTC 820283820283m

ARAnnual Primary Balance*

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Forecast

2016 bln ARS

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Bln AR bln ARS

January 22 19:00 UTC 832103832103m

ARTrade Balance

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Forecast

Previous

-1541 %

January 31 00:00 UTC 820283820283m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

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Bln AR bln ARS

January 31 00:00 UTC 820283820283m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

Previous

Bln AR bln ARS

January 31 00:00 UTC 820283820283m

ARAnnual Primary Balance*

Actual

Forecast

2016 bln ARS

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Bln AR bln ARS

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